Google's Murky Motorola Plans

By Erika Morphy
Apr 12, 2012 1:31 PM PT

Google's US$12.5 billion acquisition of Motorola Mobility has been characterized, so far, by a few simple and overarching story lines: Will it be approved by U.S. and European regulatory authorities? Ditto for other countries' legal infrastructure, such as China.

Will
complaints from competitors such as Apple lead the European Commission to start focusing right out of the gate on how Google is using and -- according to competitors -- abusing its new patent portfolio?

Indeed, that latter point is the overarching theme of the pending acquisition: The reason Google is believed to have sought out this portfolio was to better arm itself for the patent wars that have broken out among mobile companies with Motorola Mobility's 17,000-rich patent portfolio.

Little attention has been paid to the specifics of how that will work, though, as a Wall Street Journal article pointed out this week. Also, virtually no attention has been paid to other elements of Motorola Mobility, such as its manufacturing ecosystem spread across 97 countries. What of it? And what of the OEM manufacturers that use Android and that could theoretically wind up competing with a Google-manufactured device, if that is what Google plans to do?

Waiting on China

As these questions get asked, it is important to remember that the acquisition is not a done deal yet, Google spokesperson Niki Fenwick told the E-Commerce Times.

"We continue to await regulatory approval in China and to work closely with regulators," she said.

There are other legal dragons Google has to slay, such as competitors' claims that licensing Motorola Mobility's patents will be horribly expensive.

"Since we announced our agreement to acquire Motorola Mobility last August, we've heard questions about whether Motorola Mobility's standard-essential patents will continue to be licensed on fair, reasonable, and non-discriminatory terms once we've closed this transaction," she said, "The answer is simple: They will."

As for what a Google bolstered by Motorola Mobility's acquisition will do, she offered this: "Google and Motorola Mobility together will enhance competition in mobile computing, offering consumers faster innovation and a wider range of choices."

The Manufacturing Piece

Fine, but exactly how will Google and Motorola accomplish that? The point raised in the Wall Street Journal article -- Motorola Mobility's manufacturing prowess will be hard for Google to overlook -- is indeed worth contemplating.

To date, Google's business model with Android has worked very well. If Google wants to leverage Motorola Mobility's manufacturing infrastructure to build its own device, it will have to do some fancy footwork.

"Almost always companies -- and certainly with Google, when an acquisition of this size is made -- they know exactly what their goals are and how they plan to reach them," he told the E-Commerce Times.

A Delicate Line

Google no doubt has a vision for its acquisition, but executing on it may be more difficult than many realize, warned Azita Arvani of the Arvani Group.

"Google's Android platform in the mobile world is like Microsoft's Windows platform in the PC world," she told the E-Commerce Times. "If you are a Microsoft, you don't want to start making laptops.

"It is a dangerous game," she continued. "With or without a Chinese wall separating Android team from Motorola Mobility, it is hard to rationalize it to your hardware partners, who by the way, are already pressured to differentiate themselves from the rest of the Android pack."

A Device Company vs. a Software Company

Also, running a device company is fundamentally a different business from running an Internet company, she pointed out.

Again Microsoft is an apt comparison. It bought WebTV and drove that to the ground. It bought Danger, which made SideKick mobile phones, and that failed, Arvani said.

"Google needs to communicate a reasonable and consistent Motorola Mobility strategy to the market," she said. "Buying Motorola Mobility to get the patents to defend Android and its partners is understandable. But the plans for the rest of Motorola are still murky."